Play to save.
That’s the name of the game for some people looking for easy incentives to stash away a little extra cash without thinking twice about it.
Before Mike Pearson, 37, and his wife planned a trip to the Bahamas last year, they downloaded a savings game app that let them “set it and forget it.”
“We wanted to set a savings goal to help pay for the trip, and we thought it would be a good way to ‘force’ ourselves to save up,” Pearson, a New York City based music industry lawyer, told MarketWatch.
He downloaded a personal finance app called Qapital, which links to a user’s checking account and lets them set savings goals like a rainy day fund, spa weekend, concert or student loan payment.
The app has customizable rules. Pearson chose one that rounded up his transactions to the next dollar and put the difference in his savings account. When he made a purchase for $9.60, the app would deposit 40 cents into his savings account. He was able to create a joint goal, so his wife could also contribute to their savings plan.
Pearson estimates he and his wife saved $3 to $4 a day for a year. “It doesn’t sound like much, but that’s about $100 per month, or $1,200 per year,” Pearson said.
He saved up $500 and she saved $700. Together, their savings paid for plane tickets and part of the hotel in the Bahamas.
Money is the biggest stressor for Americans, beating out personal relationships and even work, a survey by Northwestern Mutual found. And 69% of employees said they were stressed over their finances, with 72% admitting to worrying about their personal finances on the job.
Consistency is key. When people start saving for something like a life event, they typically fall off the savings wagon after reaching their goal. Four in 10 people identified themselves as “aggressive short-term savers,” meaning they can put away money for a given goal like a wedding or vacation, but after that go back to their old spending ways.
“It’s not a ‘get rich quick scheme,’ but if you stick with it over a long period of time, you can definitely hit a savings goal like a small vacation or something similar,” he said.
When Pearson used the app it was free, but Qapital now offers a free 30-day trial followed by a fee of $3 to $12 a month, depending on the service people choose.
This particular savings game might have ended on a beach for Pearson, but for many Americans, saving is a struggle that threatens their financial well-being.
Less than 40% believe they’re on track with their retirement savings, according to the Federal Reserve’s 2018 Economic Well-Being of US Households report.
Long Game Savings, a free app, lets users set up an interest-bearing savings account. As people save, they get “coins” that they can use to play games like slot machines where they can win real cash. The more money they save, the more options they have to get free cash. Long Game makes money by charging banks it partners a referral fee.
Santa Clarita, Calif.-based Logan Allec, founder of the blog Money Done Right, says he stashed away between $100 and $120 a month using Long Game. “I downloaded it just for fun,” said Allec, who has been saving on the app for a year. “I don’t miss it at all, and my balance is currently about $1,800.”
Another game, SmartyPig, provides virtual piggy banks. The savings accounts collect up to 1.05% APY and users grow funds for personalized goals like an emergency fund or graduation party. SmartyPig receives a marketing fee from banks when customers cash out their transactions.
Tivitz helps kids crowdfund money for college. Students can create a gamer profile (it costs $10 for an annual registration fee) similar to a GoFundMe page detailing college goals. They play educational computer games and, after completing them, friends and family are invoiced to donate.
The app also charges a premium ($7.99) for players to get access on multiple platforms such as Apple iPhones AAPL tablets and laptops.
Other games offer lottery-style gambling. Earn, a San Francisco-based nonprofit aimed at helping low-income people manage their finances, is expanding the reach of its incentivized savings game by partnering with the Pleasanton, Calif.-based credit union Patelco.
Patelco account holders who save $5 or more each week receive an email inviting them to play Earn’s online scratch-off game, SaverLife, for a chance to win $5, $25, $5 or $100 prizes that get deposited into savings accounts within 10 days.
They’ll also be entered to win a monthly grand prize drawing for a chance to win $10,000. The average annual income of participants in the savings game is $35,322, and the average amount saved in the last six months is $932.
Using principles that appeal to natural human impulses like entertainment, social interaction, competition, and rewards like prizes promote emotional attachment, and, ultimately, engagement, research shows.
“It definitely appeals to a person’s sense of competition,” said Dr. Michele Robins, a neuropsychologist at Spectrum Neuroscience and Treatment Institute, a psychiatry and psychology clinical practice in New York City.
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Some people may have more difficulty changing their habits. An impulsive shopper, for instance, may not be swayed by an online savings game. “I really doubt that an app is going to change your personality,” he added.
“Many people think, ‘What’s the point of just saving a little bit of money because it’s not going to make a difference?’” says Eric Tyson, a former financial adviser and author of “Small Business Taxes for Dummies.”
“The reward aspect of some of these game-type apps gives people a sense of accomplishment, which might actually be helpful,” he added.